PBM: The next-generation of government transparency and accountability

In the effort to improve transparency in government, members of the accounting community are working to develop new tools to measure the effectiveness of federal government programs. The newest example of this is the effort to track spending of the recently passed $787 billion stimulus bill.

But the tools of "performance-based management" (PBM) also have implications for all federal agencies.

FederalNewsRadio recently talked to Cliff Williams, a partner at the accounting and management consulting firm, Grant Thornton. They've been developing it now for the last five years, in partnership with the Association of Government Accountants (AGA), SAS, and IBM.

We first asked Williams to describe performance-based management:

You've got a lot of data out there, it's dis-aggregated, it doesn't take into account data and performance. If you step back, and take the time to say, we need that view, the "performance-based" report does just that. It integrates financial performance data in a very non-accounting way.

Williams explains that the end-result is a more practical way of reporting that better matches the way people run businesses or agencies. He points to the 35-page AGA report on PBM that outlines several pilot efforts to implement PBM in the Federal Government, specifically among agencies like the U.S. Coast Guard, Customs and Border Protection, the Department of the Interior, and others.

The report documents in detail the experience of the Federal Transit Administration, a branch of the Department of Transportation. FTA joined the PBM development effort in its second phase.

Williams says that grants managers, for example, can look at the pilot study's mock analytical report based on PBM, "and they'll immediately be able to look at those processes, and understand what those words mean to them. It's not about accounting jargon."

The foundation of PBM is said to be its "multi-dimensional reporting", which allows answers about government performance based on integrated and cross-referenced information from such factors as:

• finance
• performance
• budget
• strategy
• demand
• work processes
• internal controls
• workload, and other factors

The "rosetta stone", or the key to making performance-based management work is XML (extensible markup language), and a special accounting-based subset of XML called XBRL (extensible business reporting language). XBRL is currently used for all government financial reporting in the Netherlands; and here in the U.S. government, two Federal agencies responsible for financial sector oversight, the Securities and Exchange Commission and the Federal Deposit Insurance Corporation,are both in the midst of pilot programs in which some of the entities they oversee are required to file financial data pre-marked using XBRL tagging.

"If you can tag data in a certain way," explains Williams, "you can twist and turn the data according to an individual's desires. If you want to see data for strategic reasons, if another person wants to see it for budget or financial reasons, the key is to put that data in a dataset one time, and have it so it can be manipulated in many directions without losing the integrity of the data."

Williams says that just as in the effort to track economic stimulus spending through the Recovery, Accountability and Transparency (RAT)Board's recovery.gov" website, "the real hard work, and the reason why you can't just snap your fingers and make this happen tomorrow, is that this data is in many different places and many different sources. The hard work, which usually takes 3-to-12 months, is figuring out what template you want, and then you use a technology enabler like XBRL to populate the template to put the right data in the right categories."

An added benefit to performance-based management is the ability to quickly spot trends and developments as often as a report is published, be it quarterly, monthly, weekly, and even on a daily basis. That's one of the goals of recovery.gov, where the chairman of the RAT Board, Interior Department Inspector General Earl Devaney, recently told a Senate committee that he hopes to be able to provide President Obama and OMB with weekly status reports on stimulus spending.

Relmond Van Daniker, executive director of AGA, told Federal News Radio that his organization's involvement in the development of PBM emerged from "an interest in reporting to people who are going to use the information. this can't be information that can only be used and understood by those in the know. We're interested in citizens, and program managers, and stakeholders getting information that they can understand."

He adds that the potential upside for government and citizens alike is that if properly implemented, performance-based management can give more people the ability to ask more questions about the performance of government programs.

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On the Web:
AGA - Performance-Based Management (pdf)

FederalNewsRadio - XBRL goes Dutch

FederalNewsRadio - XBRL: One key to the future of government transparency

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